April 14, 2011

Debt holders’ rights are being trampled in Ireland:

Ireland’s Finance Minister Michael Noonan said Allied Irish Bank Plc will seek to buy back subordinated debt in coming weeks and threatened to impose losses on holders that refuse the offer.

The government will “take whatever other action is necessary to ensure appropriate burden-sharing” with the lender’s remaining junior bondholders, Noonan said in a statement today. He didn’t give any terms of the buyback.

“They’re clearly trying to spook the market with a view to push bond prices lower so that they can get a decent take-up for any voluntary offer,” said Jim Ryan, director at Dublin-based Glas Securities. “The statement is suitably vague.”

Work is also underway to ensure “appropriate burden sharing” for subordinated bondholders of Bank of Ireland Plc and Irish Life & Permanent Plc, with “a further statement on this in the coming weeks,” Noonan said.

He reiterated that the government doesn’t plan to enforce losses on senior bondholders of Allied Irish, Bank of Ireland, EBS Building Society and Irish Life, the country’s so-called viable lenders.

Some other European bonds declined as well:

Greek and Portuguese bonds led a slump in the securities of Europe’s most indebted nations amid mounting investor concern that some may be forced to restructure their debts.

The declines pushed the yields on Greek and Portuguese 10- year bonds to euro-era records after German Finance Minister Wolfgang Schaeuble said that Greece may need to renegotiate its debt burden if an audit in June questions its ability to pay creditors. Standard & Poor’s head of European sovereign ratings, Moritz Kraemer, said the risk of such an event has risen. Greek two-year yields climbed the most since January 27.

The yield on 10-year Greek debt jumped 36 basis points to 13.27 percent as of 4:38 p.m. in London, the highest since at least 1998 when Bloomberg began collecting the data. The two- year note yield surged as much as 103 basis points to 17.96 percent.

Portuguese 10-year yields added 14 basis points to 8.88 percent, after reaching 8.89 percent, the most since at least 1997. Two-year note yields were 26 basis points higher at 9.31 percent.

Schaeuble told Germany’s Die Welt newspaper that Greece may have to restructure because creditors can’t be forced to take losses until Europe’s permanent rescue system for the euro starts up in mid-2013.

The US Senate has been astonished to learn that financial markets are not a cooperative game.

The IMF has released the April 2011 Global Financial Stability Report.

A British court has ruled “kettling” illegal:

The kettling of G20 protesters in London was illegal, a British High Court has ruled in a case with sweeping implications in Toronto.

The decision Thursday by the Queen’s Bench justices said police were working “in good faith” but still overreacted when they corralled 4,500 people inside a Climate Camp in London for three hours on April 1, 2009.

“The police may only take such preventive action as a last resort catering for situations about to descend into violence,” the Queen’s Bench justices.

“The test of necessity is met only in truly extreme and exceptional cases.”

For the life of me, I don’t understand why this method of detention without cause wasn’t understood to be illegal from the beginning, but better late than never.

The Canadian preferred share market was mostly down today, with PerpetualDiscounts losing 18bp, FixedResets gaining 4bp and DeemedRetractibles off 14bp. Volatility picked up a little with four entries in the Performance Highlights table. Volume was anemic.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 0.0119 % 2,409.2
FixedFloater 0.00 % 0.00 % 0 0.00 0 0.0119 % 3,623.4
Floater 2.50 % 2.27 % 39,540 21.56 4 0.0119 % 2,601.3
OpRet 4.91 % 3.12 % 55,374 2.09 8 0.1205 % 2,414.6
SplitShare 5.20 % -1.52 % 104,926 0.66 6 0.1737 % 2,494.9
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.1205 % 2,208.0
Perpetual-Premium 5.79 % 5.61 % 123,989 6.15 8 0.0646 % 2,050.6
Perpetual-Discount 5.60 % 5.66 % 131,770 14.38 16 -0.1812 % 2,115.0
FixedReset 5.16 % 3.46 % 201,735 2.94 57 0.0411 % 2,292.1
Deemed-Retractible 5.27 % 5.23 % 299,960 8.17 53 -0.1429 % 2,078.2
Performance Highlights
Issue Index Change Notes
FTS.PR.F Perpetual-Discount -2.87 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-04-14
Maturity Price : 22.83
Evaluated at bid price : 23.02
Bid-YTW : 5.39 %
CIU.PR.A Perpetual-Discount 1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-04-14
Maturity Price : 22.63
Evaluated at bid price : 22.80
Bid-YTW : 5.10 %
IAG.PR.E Deemed-Retractible 1.22 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-01-30
Maturity Price : 25.00
Evaluated at bid price : 25.73
Bid-YTW : 5.61 %
ELF.PR.G Deemed-Retractible 1.35 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.31
Bid-YTW : 7.33 %
Volume Highlights
Issue Index Shares
Traded
Notes
NA.PR.M Deemed-Retractible 30,000 RBC bought two blocks from Nesbitt: 14,000 at 25.91 and 14,100 at 25.90.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-14
Maturity Price : 25.00
Evaluated at bid price : 25.85
Bid-YTW : 5.29 %
TD.PR.O Deemed-Retractible 21,992 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.60
Bid-YTW : 5.05 %
MFC.PR.A OpRet 19,980 YTW SCENARIO
Maturity Type : Soft Maturity
Maturity Date : 2015-12-18
Maturity Price : 25.00
Evaluated at bid price : 25.76
Bid-YTW : 3.47 %
BNS.PR.M Deemed-Retractible 19,410 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.85
Bid-YTW : 5.06 %
TD.PR.G FixedReset 18,355 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-30
Maturity Price : 25.00
Evaluated at bid price : 27.15
Bid-YTW : 3.33 %
BMO.PR.J Deemed-Retractible 17,576 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.09
Bid-YTW : 5.04 %
There were 16 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
FTS.PR.F Perpetual-Discount Quote: 23.02 – 23.65
Spot Rate : 0.6300
Average : 0.3712

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-04-14
Maturity Price : 22.83
Evaluated at bid price : 23.02
Bid-YTW : 5.39 %

TCA.PR.Y Perpetual-Discount Quote: 50.05 – 50.39
Spot Rate : 0.3400
Average : 0.2094

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-04-04
Maturity Price : 50.00
Evaluated at bid price : 50.05
Bid-YTW : 5.49 %

FTS.PR.E OpRet Quote: 26.80 – 27.07
Spot Rate : 0.2700
Average : 0.1817

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-07-01
Maturity Price : 25.75
Evaluated at bid price : 26.80
Bid-YTW : 3.12 %

TCA.PR.X Perpetual-Discount Quote: 50.07 – 50.34
Spot Rate : 0.2700
Average : 0.1868

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-11-14
Maturity Price : 50.00
Evaluated at bid price : 50.07
Bid-YTW : 5.47 %

RY.PR.G Deemed-Retractible Quote: 23.66 – 23.90
Spot Rate : 0.2400
Average : 0.1650

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.66
Bid-YTW : 5.26 %

RY.PR.R FixedReset Quote: 27.30 – 27.52
Spot Rate : 0.2200
Average : 0.1452

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 27.30
Bid-YTW : 3.36 %

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